Mathematics

Angelique Huerta

27 August, 17:36

Compound interest is interest earned on both the initial investment and the previously earned interest. An initial amount of money, the principal P 0, is invested in an account that pays an annual interest rate r (written as a decimal), compounded n times per year. The amount in the account at the end of each time period is the principal plus the interest.

For example, $1,000 is invested at a 2% interest rate and compounded quarterly. Then P 0 = 1,000, r = 0.02, and n = 4.

Select all that apply.

Select the formulas that give the amount P in the account after the first period.

A. P = 1.005P0

B. P = 1.02P0

C. P = P0 (0.02/4)

D. P = P0 (1.02/4)

F. P = P0 (1 + 0.02/4)